Corporate Minutes: Best Practices Create Best Evidence Part II: The Art of Preparing Minutes

Corporate Minutes: Best Practices Create Best Evidence Part II: The Art of Preparing Minutes

 
Approaches to the drafting of minutes have varied widely over the years, with many advocating a short form, summary record of corporate actions taken, and others (the minority) preferring a lengthy, nearly verbatim transcript of the discussion. The better practice, supported by the Disney cases and others such as Netsmart, is to provide varying levels of detail depending on the importance of the matter discussed or decided by the board.
 
Excerpt:
 
Preamble and Closing Sections. The preamble covers much of the nuts and bolts of the meeting: the time, date and location, the persons present (including any members of management, experts or other guests) and whether any participants were present by teleconference or attended only portions of the meeting. The preamble may also evidence compliance with procedural requirements, such as how and when notice was provided to directors. The minutes should end with the time of adjournment to indicate how much overall time directors devoted to the topics discussed during the meeting. This allows courts to assess whether it was sufficient for the importance of the matter. The closing section may also provide, if available, the date, time and location for the next meeting as a reminder to the directors.
 
Board Materials. Where materials such as analyses, memoranda or slides are provided to the directors in advance of a meeting or handed out at a meeting, it is helpful to reference in the section devoted to the relevant matter what the materials were and when they were provided to the directors. Barring any attorney-client privilege or other confidentiality concerns, clean copies of those materials should be retained with the related minutes. In addition, if the matter was considered at an earlier meeting or was discussed with individual board members between meetings, it may be helpful to reference the earlier discussions to reflect the boards overall level of attention to, and familiarity with, the matter. When the board is considering matters of significance to the company and the materials are complex, a record indicating that the directors received materials sufficiently in advance of the meeting to study and understand them and that they discussed the matter over time supports the proposition that they were adequately informed.
 
Management and Expert Reports. If presentations are made to the board or committee by company management or by outside advisors, the minutes should include the names of the presenters, the general nature of the presentation and any materials they referenced. Directors are generally entitled to rely on information, opinions and reports presented by the company’s officers or employees, by committees of the board, and by other persons such as accountants, investment bankers, attorneys or consultants. Directors must do so in good faith, in the belief that the matter is within the persons professional or expert competence and that the person was selected with reasonable care by or on behalf of the corporation. In selecting experts or considering management input, directors should also consider whether, in each case, the expert or officer is subject to conflicts of interest that could affect her judgment or bias her input. Minutes should reflect reliance on the officer or expert and, where applicable, the process for selecting the expert that supports the directors reasonable belief in the experts competence. [footnotes omitted]